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2024 (7) TMI 1176
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....es of law as the same was passed in violation of circular no. 19/2019 issued by CBDT which mandates that no order shall be passed without there being Valid Document Identification Number (DIN). 3. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in rejecting the contention of assessee that the assessment order passed is bad in the eyes of law as the same was passed undated & not digitally signed. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the order passed by the learned AO under section 153A r.w.s 143(3) is illegal and bad in law as the same has been passed without having valid jurisdiction. 5. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under section 153A against the appellant and the assessment framed under section 153A r.w.s. 143(3) are in violation of the statutory conditions of the Act and the procedure prescribed under the law and as such the same is bad in the eye o....
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....me Tax Act." 2. These are four appeals filed by the assessee and three appeals filed by the Revenue arising from the order dated 21.09.2022 passed by ld. CIT(A) for the following assessment years: Appeals filed by the assessee: AY 2017-18 - ITA No. 2632/Del/2022 AY 2018-19 - ITA No. 2633/Del/2022 AY 2019-20 - ITA No. 2634/Del/2022 AY 2020-21 - ITA No. 2635/Del/2022 Appels filed by the revenue: AY 2017-18 - ITA No. 2844/Del/2022 AY 2018-19 - ITA No. 2845/Del/2022 AY 2019-20 - ITA No. 2846/Del/2022 3. In the appeals filed by the assessee for AY 2017-18, 2018-19, 2019- 20 and 2020-21, the common issue is regarding total disallowance of purchases made by AO and partially sustained by the ld. CIT(A) by applying the gross profit rate. In the appeals filed by the Revenue for all the three years, the only issue is regarding the deletion of addition by the ld. CIT(A) on account of alleged bogus purchases whereby ld. CIT(A) has restricted the addition to the gross profit rate. 4. In addition to the above-mentioned common issue in four years, there is an additional issue in A.Y. 2018-19 regarding the add....
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....i Ganpati Traders - 3,06,15,810 - - ix. M/s. Ambika International - 14,89,52,322 - - x. M/s. Radiant Overseas - 18,59,83,259 - - xi. M/s. Royal Traders - 5,46,17,922 - - xii. M/s. Dev Infocom (P) Ltd. - 36,20,77,917 81,21,89,115 - xiii. M/s. At Your Door Step Services (P) Ltd. - 2,13,75,600 - - xiv. M/s. Rudrani Multi Trade - 2,13,75,600 - - xv. M/s. Sai Enterprises - 6,04,32,128 - - xvi M/s. Sai Enterprises - 5,85,95,852 - - xvii. M/s. Ghanshyam Enterprises - 1,78,11,882 - - xviii. M/s. Spark Infrapower (P) Ltd. - - 2,06,67,540 - xix. M/s. Jai Bhawani Enterprises - - 9,30,54,020 40,69,867 Total 8,00,23,080 122,61,97,714 92,59,10,675 40,69,867 Total Parties (2) (17) (3) (1) 10. The reasoning given by Assessing Officer for disallowing the purchases in all these years is verbatim same as can also be seen from findings recorded by the AO in the Assessment Orders at the second last page Para 6 (for AY 2017-18)/ 5th last page Pa....
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....t of Mr. Manoj Dudeja are otherwise untenable in the absence of any cross examination being allowed by Mr. Manoj Dudeja as is admitted by the assessing officer himself in the Assessment Order at the second last page Para 6(iii) (for AY 2017-18)/ 5th last page Para 6(iii) (for AY 2018-19)/ 3rd last page Para 6(iii) (for AY 2019-20, and 3rd last page Para 6(iii) (for AY 2020-21), of the respective Assessment Years. That in any case assessment cannot be framed u/s 153A by solely relying on the third party statement. v. On merits, the assessee filed detailed written submission explaining as under:- a) That the primary reason for making addition on account of bogus purchases is the statement of Manoj Dudeja recorded in August, 2020. b) Firstly, this statement of Mr. Manoj Dudeja is with reference to only two suppliers namely SK Trading and Singh Enterprises and purchases from these two parties are only in the A.Y. 2017-18 and 2018-19. There is no whisper linkage of any other supplier whatsoever in the statement of Mr. Manoj Dudeja and hence there is no justification for disallowing the purchases from other parties. c) Even these two firms namely SK Tr....
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....t know anyone called Vijay Kumar nor Singh Enterprises. Q. 30. Please state your relation with Sanjeev Sharma, proprietor of SK Trading? Ans: I don't know anyone called Sanjeev Sharma nor SK Trading. Q. 51. ....................................... Ans. ....................................... 6................................. But as per me, I don't know to SK Trading Co. then how can I comment on same that in which type of business that company involved. ........................................ 7. ................................. But as I already stated in my last point no. 8 I don't know anything about SK Trading than how can I know about some Rajeev Sharma. ........... 10. .................. But I am not agree with him as he stated. I also don't know about sachin & Singh Enterprises and also don't know about his business............ Q.55. You are once again accorded an opportunity to State your association with M/s SK Trading Co. Ans: I come to know about SK Trading Co. from the market that it is a bogus company used for accommodation entries. I had facili....
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....st the assessee. It was also pointed out that there is no reference to the assessee in the statement of Mr. Manoj Dudeja. In the absence of any specific allegation being made against assessee in the statement of Mr. Manoj Dudeja, no adverse inference can be drawn against the assessee. 23. The Assessing Officer has made disallowances in respect of a total of 19 parties spread over a period of four years despite the fact that the statement of Mr. Manoj Dudeja was with reference to only two parties namely SK Trading and Singh Enterprises from whom purchases have been made only in A.Y. 2017-18 and AY 2018-19. Thus, the disallowance of purchases with respect of remaining 17 parties is arbitrary and without any basis. 24. Moreover, as regards the various other observations of the AO for holding that the purchases made by the assessee are not genuine, the assessee has submitted a point wise detailed rebuttal for each observation during the course of assessment proceedings as well as appellate proceedings. The same are as under: As regards the statement of Mr. Akshat Jain (Director of the company) - (PB pg. 1-23) 25. The AO interpreted the statement of Mr. Akshat Jain to draw a....
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....y. I will make the records available in due course of time." i. Thus, adverse inference drawn by the AO is on the basis of misinterpretation of statement of Mr. Akshat Jain. In fact the assessing officer has conveniently ignored the categorical assertion made in the statement by Mr. Akshat Jain to the effect that 'we have all the documentary evidence to proof the genuineness of our purchases from the above entities.' The statement of Mr. Ravnish Kumar (PB pg. 30-35) 29. The Assessing Officer relied on the statement of Mr. Ravnish Kumar recorded on 23.03.2021. It has been alleged that Mr. Ravnish Kumar has stated that no goods were received by the assessee on the premises located at 7/33, Ansari Road, Daryaganj, Delhi as per his knowledge. 30. The relevant extract of the statement of Mr. Ravnish Kumar reads as under: "Q. No. 14: I am showing you the purchase invoice found and seized as Annexure A-1 to Annexure A-10 in respect of M/s. Mahavir Transmission Limited (pertaining to FY 2017-18) during the course of search proceedings at 7/33, Ansari Road, Daryaganj, Delhi. Please acknowledge it and explain why these invoices are kept here. Ans: Yes, I a....
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....he could not have any knowledge about the activities of the Daryaganj premises. The Premises No. 7/33, Ansari Road, Daryaganj, Delhi has a very large space of about 1,800 Sq. Yards and approximately 1,000 Sq. Yards open space for storage of material purchased by the assessee company. Statement of Mr. Anil Chander Jain (Employee) 33. The AO has relied on the statement of Mr. Anil Chander Jain recorded on 23.03.2021 to draw adverse inference. Mr. Anil Chander Jain was looking after the production at Dehradun, Production Unit located at 138, Industrial Estate, Vikas Marg, Dehradun. 34. Accordingly, his statement was with reference to the activities at that premises i.e. 138, Industrial Estate, Vikas Marg, Dehradun which is also evident from his statement which reads as under:- "Q. 14 Please state nature of your business transactions of following entities: 1. Kumar Traders, 2. SK Trading Company, 3. Singh Enterprises, 4. Advance Retails, 5. Dheeraj Sales, 6. Ghanshyam Enterprises, 7. Gulshan Tradelinks, 8. Kapil Enterprises, 9. Shri Ganpati Traders, 10. Dheeraj Sales Corporation? Please also produce their ledger accounts. Ans. Out of the entities stated by yo....
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....essee before AO/CIT(A). It is also imperative to note that both the units are duly disclosed in the GST Registration. * Thus, the statement of Mr. Anil Chander Jain in fact supports the case of the assessee as goods were not received at the premises being looked after by Mr. Anil Chander Jain, but at the other unit and accordingly the AO was not justified in drawing adverse inference on the basis of this statement ignoring all the evidences submitted by the assessee company before the ADIT Investigation & AO in support of the purchases made by it from various parties. As regards the observation made by AO with respect to transfer of payments received by the suppliers from the assessee company within a short time span to other firms. 36. The AO has quoted bank statement of the supplier with respect to the above observation. i. It is evident from the bank statement reproduced by the AO himself that the assessee has made purchases through banking channels only which have also been duly received by these suppliers. ii. There is no material or allegation that cash was withdrawn against these payments made by the assessee company. On the contrary, the ban....
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....he GST returns filed by each of these suppliers. As regards the alleged some blank column in purchase invoices 39. The AO held that some of the columns in the purchase invoice such as delivery note number, mode of payment etc. are blank. 40. In response to the show-cause notice issued by the AO, it was clarified by the assessee during the course of assessment proceedings that the invoices are printed considering all possible information as may be required in different situations in foreseeable future. However, only those fields/columns as are relevant for the particular supplies are filled and other fields which are not relevant are not filled. It was submitted that the mandatorily fields as required under GST Act have been duly filled up and mentioned in the invoice. 41. In this regard it was also submitted that invoices are required to be issued in compliance to details as per the GST Portal. So, there was nothing wrong in not filing those fields/columns which were not relevant or applicable for the purpose of supplies made to the assessee company by the suppliers. These details being secondary and not relevant to the case under consideration cannot contribute to hold....
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....ector 47. The Assessing Officer has also referred to the enquiry conducted through Inspector during the post search investigation in respect of a few suppliers. In this regard, the Assessing Officer has referred to the inspector report. 48. Firstly, the reference is in respect of only eight suppliers. Further out of these eight suppliers, the inspector report in respect of three suppliers namely M/s. Dev Infocom (P) Ltd. M/s. At Your Door Step (P) Ltd. and M/s. Spark Infra Power (P) Ltd. clearly states that the company was doing business at that address during the period. Further, even in none of the other cases, it could come out that the suppliers were not genuine. Nowhere any statement was recorded by the Inspector of any person alleging that supplies made by the appellant company was not genuine from any of these supplies. Further in respect of each of these suppliers, the assessee submitted detailed clarification which has been quoted by the Assessing Officer in the assessment order, but has not been rebutted by the AO. 49. It may be relevant to point out that later on during the course of assessment, the AO himself carried out the verification by issuing notices unde....
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.... 2020-21 328163 162827 22280151 19464252 22445901 10564403 172712 122676 Volume at page 5936 to 5937 Yield for above years of this unit is 100%. 54. In this unit the assessee is converting raw material into finished goods using non-foundry operations such as cutting, stripping, drawing, de-stranding, spooling, welding, stranding etc. In these processes there is no loss of material as raw material gets converted into finished goods and scraps. Unit at Sikandrabad District, Bulandshahr, Uttar Pradesh AY Opening Balance Inwards Outwards Closing Balance Enclosed in paper book page at Aluminium (Kg) Steel (Kg) Aluminium (Kg) Steel (Kg) Aluminium (Kg) Steel (Kg) Aluminium (Kg) Steel (Kg) 2019-20 563 0 37517899 4847808 39632656 47799657 646837 48151 Volume 6 at page 5773 to 5774 2020-21 640837 48151 47005115 10253150 47453814 10219940 192108 80362 Volume 6 at Page 5948 to 5949 Yield for above years of this unit is 96%. 55. In this unit the assessee is converting raw material into finished goods using foundry operations also (ap....
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....ld. CIT(A) Order for AY 2017-18). 60. Having said so, the ld. CIT(A) sustained partial addition by applying the Gross Profit Rate of the respective assessment years in respect of the purchases alleged by the AO to be bogus. Thus, though the ld. CIT(A) deleted the addition of bogus purchases, however, he made the addition over and above the Gross Profit Rate declared by the appellant company by applying the same Gross Profit Rate of the respective assessment year in respect of the alleged bogus purchases. Here, the ld. CIT(A) has done right in deleting the entire addition made on bogus purchases but gone wrong in sustaining the addition by applying the Gross Profit Rate in respect of the alleged purchases. 61. Now coming first to these two parties namely SK Trading and Singh Enterprises, the sole basis for drawing adverse inference against the assessee company is the statement of Mr. Manoj Dudeja and Mr Gopal. This statement was recorded much before the date of search on the assessee. In the entire statement recorded of Mr. Manoj Dudeja/ Gopal, there is no allegation against or even the name of the assessee. He, in fact, has categorically stated that he is not the owner of the....
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.... basis of the statement without any corroboration with the material found during the course of the search. In the present case, as is evident from the Assessment Order, that there is no incriminating material referred to which has been found during the course of the search. 63. In view of the above facts, the addition on the basis of statement of Mr. Manoj Dudeja cannot be sustained, particularly keeping in view the fact that assessee has produced all the evidences in support of its contention which include the following documents:- i. Invoice containing details such as date, invoices numbers, amount etc. ii. Copy of ledger account of the party in the books of assessee-company. iii. Confirmation from the parties. iv. Copy of invoices, transport receipt/bilty. v. Form-C, Trip sheet/e-way bill, if any. vi. Copy of bank statement of appellant company. vii. Copy of GSTR-2A for GST compliance/VAT Assessment Order 64. In respect of the other parties also nothing adverse was found during the course of the search. Also there is no incriminating material which was unearthed during the course of the search in respect of the....
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....t Order has tried to draw adverse inferences on the basis of the fields/column in the purchase invoices being blank or the vehicle number not being found on a private website and also on the basis of the analysis of the bank statement of the supplier. In this regard, it is important to point out that assessee in reply to the show cause notice has specifically rebutted each of these allegations and the AO despite quoting the reply of the assessee to the show-cause notice has not been able to rebut or find anything adverse in the reply. 68. Also, as regards the observations about the inactive status of suppliers on the GST and non-filing of ITR, each of these suppliers were registered with the GST during the period when they made supplies to the appellant company gets confirmed from the fact that they were registered on the GST Portal. Each of these suppliers have filed the GST Return, copies of which have been submitted by the appellant company after downloading the same from GST Portal. The input tax credit in respect of each supplies have been allowed to the appellant company and no dispute has been raised in respect of these supplies under the GST. Thus, the observation of the....
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....d this gross profit margin of each of the years as well as the price at which material has been purchased by the assessee. No defect has been pointed out in the price analysis furnished by the assessee. Further in the absence of any discrepancy being pointed out in the books of accounts and assessee having submitted complete details including quantitative details, there is no justification for alleging that the gross profit margin declared by the assessee is low. 70. On considering the entire facts, it is a case where the appellant company has produced sufficient evidences in respect of the purchases made by it. Sufficient evidences have also been produced in respect of actual movement of the goods by filing the copy of the transport receipt, copy of Form C, trip sheet, e-way bill, kantaparchi, weighing slip, transportation bills, vehicle RC status. In fact it has also filed the GST paid by it by way of Reverse Charge Mechanism applicable on transportation charges. The assessee has also produced evidences regarding the expenses relating to the freight which has been duly accounted in the books of account and which has not been doubted by the AO and in fact deduction of the same ....
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....ing the addition of Rs. 2,35,98,600/- on account of difference in purchase price and the stamp duty value of the property. (ii) That the learned CIT(A) has erred, both on facts and in law in arbitrarily ignoring the valuation report submitted by the assessee. (iii) That the learned CIT(A) has erred, both on facts and in law, in confirming the abovesaid addition as the addition is legally unsustainable in the absence of any valuation report being obtained by the AO." 75. This issue has been discussed by the AO on third last page at para 8 of the Assessment Order. It has been alleged that during the course of the search, document regarding the purchase of immovable property i.e. Industrial Land, Gate No. 557, at Sanwali Tehsil, Sikandrabad, Bulandshahr, U.P. was found and it was noticed that the stamp duty value of this property was Rs. 3,40,16,000/-. However, the assessee had paid Rs. 1,04,17,400/- as purchase consideration. 76. Thereafter, an explanation with respect to the difference in purchase price and the stamp duty value of the property was called from the assessee. During the course of assessment proceedings, the assessee vide reply dated 22.03.2022 (....
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....not have the power to change the provisions of this Section. It was argued that the ld. CIT(A)'s power of assessment do not extend to convert provisions of Section 50C to Section 56(2)(x). On the other hand, the ld. DR supported the order of authorities below. The ld. DR argued that reference to DVO is compulsory but the option of the Assessing Officer. 82. Heard the arguments of both the parties and perused the material available on record. 83. The provisions of Section 50C are as under: "Special provision for full value of consideration in certain cases. 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer : Provided that where the ....
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.... section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2.-For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed or assessable by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer." 84. Provisions of Section 56(2)(x) are as under: "Income from other sources. 56. ............ (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other....
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....any property, other than immovable property,- (A) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (B) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration : Provided that this clause shall not apply to any sum of money or any property received- (I) from any relative; or (II) on the occasion of the marriage of the individual; or (III) under a will or by way of inheritance; or (IV) in contemplation of death of the payer or donor, as the case may be; or (V) from any local authority as defined in the Explanation to clause (20) of section 10; or (VI) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or (VII) from or by any trust or institution registered under section 12A or section 12AA; or ....
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.... (5) The Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment, if the assessee does not co-operate or comply with his directions. (6) The Valuation Officer shall send a copy of the report of the estimate made under sub-section (4) or sub-section (5), as the case may be, to the Assessing Officer and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1). (7) The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the assessee an opportunity of being heard, take into account such report in making the assessment or reassessment. Explanation.-In this section, "Valuation Officer" has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957)." 86. Now coming to the legal proposition, i. Firstly, the addition has been made by the AO under section 50C which is not applicable in the case of the purchaser, ii. Secondly, the CIT(A) has changed the section in which addition was made by the AO from Section 50C to Section 56(2)(x). In this regard, it is ....
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....ssee to explain whether the conditions of section 69A are attracted or not. Further, as per the decision of the Hon'ble Jurisdictional High Court in CIT vs. Aar Pee Apartments (P.) Ltd., when the scope and ambit of the two separate provisions are altogether different, the addition cannot be changed to another provision. Following the aforesaid decision of the Hon'ble Jurisdictional High Court, the coordinate bench in the case of Toffee Agricultural farms Pvt. Ltd. vs. ITO (supra) had expressed the view that the first appellate authority unilaterally has no power to change the section under which the Assessing Officer has assessed an item of income. Thus, respectfully following the ratio laid down in these decisions, I hold that the addition made confirmed under section 69A of the Act deserves to be deleted. Accordingly I do so. 8. In the result the appeal of the assessee is allowed." * Smt. Nirmla Jain, W/O Late Sh. Pawan Kr. Jain Vs. ITO Ward-2 (1) , CGO Complex-2, Kamla Nehru Nagar, Ghaziabad, Uttar Pradesh. 2023 (6) TMI 719 - ITAT Delhi Dated: - 14-3-2023 "5. After careful consideration of rival submissions of both the sides and facts and circumstances....
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....bunal has recorded a categorical finding that "it is clear that under the provisions of Section 68, the addition made by the Assessing Officer and sustained by the CIT (Appeals) cannot be sustained, meaning thereby that the Tribunal was of the opinion that the Assessing Officer and the CIT (Appeals) committed an error in adding the aforesaid amount in the income of the appellant-assessee under Section 68 of the Act. In view of the above, when the said income cannot be added under Section 68 of the Act and the Tribunal was not competent to make the said addition under Section 69-A of the Act, the entire order of the Tribunal sand vitiated in law. Accordingly, we answer the question of law, as framed above, in favour of the appellant-assessee and against the Revenue and hold that the Tribunal was not competent to make any addition under Section 69-A of the Act and as the same was subject matter of the appeal before it." 89. Even, if it is presumed that the addition has been made under section 56(2)(x) of the Act, in such circumstances also, the addition made by the AO and confirmed by the ld. CIT(A) is bad in law and liable to be deleted in the absence of the val....
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.... (2) and respectfully following various decisions discussed above, we hold that the CIT(A) was not justified in confirming the action of the AO in adopting deemed sale consideration in violation of section 50C (2) of the Act. 14. In the above view and legal precedents in these peculiar facts of the case, the failure of the AO to follow the procedure as prescribed under section 50C (2) in particular, and therefore, the CIT(A) action in confirming such order is held unjustified and against law by sustaining stamp duty value of property Rs. 11,19,40,441/- as deemed sale consideration u/s. 50C against actual sale consideration and fair market value Rs. 8,81,00,000/-.Accordingly, the AO is directed to adopt the value of sale consideration at Rs. 8,81,00,000/- of the subject property for the purpose of computation of Long-Term Capital Gains. Thus, the ground no. 1 of appeal of the assessee is allowed and corresponding ground no 2. Of the department is dismissed." * ITO, Ward-15 (1), Hyderabad Vs. Smt. Vankayalapati Kiranmayee And (Vice-Versa) 2022 (1) TMI 294 - ITAT Hyderabad Dated: - 6-1- 2022 "9. In this regard, we refer to Section 50C (2) of the Income Tax A....
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....way considered the stamp duty valuation for the purpose of making addition u/s. 56(2)(vii) of the Act. In such circumstances, it was very necessary for the AO to refer the matter to the DVO which he failed to do so. 23. Even before us, the ld. DR submitted that referring the matter to the DVO is only with regard to applicability of section 50C of the Act in the case of seller and it is not all required to refer the matter to the DVO u/s. 56(2)(vii) of the Act which is totally misconceived. In such circumstances, in our opinion, the addition made by the AO is totally unjustified and cannot be sustained. We are also of the opinion that the revenue cannot be allowed a second innings by sending the matter back to the AO to refer the matter to the DVO to ascertain the correct fair market value of the property purchased by the assessee, when assessee all along disputed the valuation of property adopted by the AO for the purpose of registration of the same and the AO failed to find out the correct value of the property both at the assessment stage as well as at the first appellate stage. ... 25. The present issue in dispute is also supported by the decision of M....